Thales (HO) AI Stock Analysis

• Market Cap: €46.28B
• Dividend Yield: 1.68%
• Average Volume (3M): 229.12K
• Price to Earnings (P/E): 67.7
• Beta (1Y): 0.55
• Revenue Growth: 11.16%
• EPS Growth: -50.57%
• Country: FR
• Employees: 78,189
• Sector: Industrials
• Sector Strength: 75
• Industry: Aerospace & Defense
• EPS (TTM): 4.27
• Shares Outstanding: 205,941,910
• 10 Day Avg. Volume: 218,129
• 30 Day Avg. Volume: 229,121
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €264.13
• Price Target Upside: 18.02% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

• Rating: 71 Outperform
• Price Target: €253.00 ▲(13.05% Upside)

Thales's strong financial performance and strategic growth in the Defense segment are the primary drivers of its stock score. However, technical indicators suggest bearish momentum, and the high P/E ratio raises valuation concerns. The earnings call provided positive guidance, but challenges in certain segments and increased net debt are notable risks.

Positive Factors

Defense Segment

Continued strength in Defense and Avionics contributes to growth.

Financial Performance

Free Cash Flow was stronger than expected on better Working Capital development.

Order Intake

Order intake was boosted notably by large orders.

Negative Factors

EPS

EPS faces headwinds from the French tax surcharge.

Orders

Orders are softer than expected, and down 25% year over year to €3.78bn.

Sales

Sales came in a touch below expectations driven down by Aerospace and C&D.

Thales Business Overview & Revenue Model

Company Description

Thales S.A. provides various solutions for civilian and military customers in the aeronautics, space, defense, security, ground transportation, and digital security markets worldwide. It operates through Aerospace, Transport, Defence & Security, and Digital Identity & Security segments. The company offers communications, command, and control systems; mission services and support; protection and mission/combat systems; surveillance, detection, and intelligence systems; training and simulation solutions for air, land, naval, and joint forces; and digital identity and security solutions. It also provides air traffic management solutions; flight decks and avionics equipment and functions; in-flight entertainment and connectivity systems and services; electrical systems; aerospace training solutions; navigation solutions; support and services for avionics equipment; and vision systems. In addition, the company designs, operates, and delivers satellite-based systems for telecommunications, navigation, earth observation, environmental management, exploration, and science and orbital infrastructures; signaling, communications and supervision, and fare collection management systems and related services; cybersecurity and railway digitalization systems; and main line rail, and urban and intermodal mobility solutions. Further, it provides solutions for various markets and applications, including radiology, radio frequency, microwave sources, training and simulation solutions, lasers, and microelectronics solutions for science, industry, space, defense, automotive, railways, and energy conversion platforms. Thales S.A. has a strategic agreement with Google LLC. The company was formerly known as Thomson-CSF and changed its name to Thales S.A. in 2000. Thales S.A. was founded in 1893 and is headquartered in Courbevoie, France.

How the Company Makes Money

Thales generates revenue through a diversified business model that includes the sale of high-tech products, systems integration services, and ongoing maintenance and support contracts. Key revenue streams come from defense contracts with governments, providing military systems and services; aerospace solutions for commercial airlines and business jets; and security systems for both public and private sectors. Additionally, Thales benefits from long-term partnerships with various governmental and commercial entities, which provide a steady flow of income through multi-year contracts. The company's focus on research and development also enables it to offer cutting-edge solutions, further driving sales and market demand.

Thales Financial Statement Overview

Summary

Thales demonstrated strong financial performance with notable revenue and profit growth, improved operational efficiency, and robust cash flow generation. The elimination of debt significantly bolstered financial stability, although the high liabilities-to-assets ratio requires monitoring.

Income Statement

Thales has demonstrated strong revenue growth with a notable increase from €18.43 billion in 2023 to €20.58 billion in 2024, marking an 11.65% growth. The gross profit margin remained high at 26.11% for 2024, indicating efficient cost management. The net profit margin improved significantly from 5.55% in 2023 to 6.90% in 2024, reflecting enhanced profitability. EBIT and EBITDA margins also improved, suggesting operational efficiency gains.

Balance Sheet

Thales's balance sheet is robust with a strong equity position. The debt-to-equity ratio improved significantly, as total debt was eliminated in 2024, reducing financial risk. Return on equity (ROE) improved to 18.89% in 2024, indicating effective use of shareholder funds. However, the equity ratio was 18.80%, suggesting a relatively high level of liabilities compared to assets, which requires monitoring.

Cash Flow

Thales exhibited excellent cash flow management with a substantial increase in free cash flow from €0.97 billion in 2023 to €2.01 billion in 2024, a growth of 107.54%. The operating cash flow to net income ratio was strong at 1.86, indicating robust cash generation relative to accounting profits. The free cash flow to net income ratio also improved, reinforcing the company's ability to generate cash.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	20.58B	18.43B	17.57B	16.19B	16.99B
Gross Profit	5.37B	4.77B	4.46B	4.03B	3.94B
EBITDA	2.67B	2.46B	2.29B	2.17B	1.65B
Net Income	1.42B	1.02B	1.12B	1.09B	483.40M
Balance Sheet
Total Assets	39.99B	38.79B	34.42B	32.84B	31.81B
Cash, Cash Equivalents and Short-Term Investments	4.77B	4.08B	5.30B	5.05B	5.00B
Total Debt	7.82B	8.43B	5.47B	5.92B	7.60B
Total Liabilities	32.43B	31.82B	27.04B	26.12B	26.50B
Stockholders Equity	7.52B	6.83B	7.17B	6.48B	5.11B
Cash Flow
Free Cash Flow	2.01B	970.80M	2.56B	2.26B	950.20M
Operating Cash Flow	2.64B	1.60B	3.06B	2.71B	1.35B
Investing Cash Flow	-62.80M	-4.23B	-1.21B	-493.40M	-386.40M
Financing Cash Flow	-2.00B	1.59B	-1.77B	-2.17B	1.20B

Thales Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 223.80
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:HO, the sentiment is Negative. The current price of 223.8 is below the 20-day moving average (MA) of 229.42, below the 50-day MA of 237.49, and above the 200-day MA of 210.73, indicating a neutral trend. The MACD of -4.07 indicates Positive momentum. The RSI at 39.83 is Neutral, neither overbought nor oversold. The STOCH value of 24.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FR:HO.

Thales Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HO	71 Outperform	€46.28B	67.72	14.51%	1.68%	11.16%	-50.57%
Sector *	64 Neutral	$10.66B	15.60	8.14%	2.00%	2.79%	-14.82%
EXALF	―	$2.27B	―	-2.92%	―	―	―
EADSF	―	$167.53B	30.97	23.80%	1.60%	―	―
0IAX	―	€21.10B	26.45	12.93%	―	―	―
0EKE	―	€2.07B	31.41	6.49%	―	―	―
0IU8	―	€116.48B	27.05	35.36%	―	―	―

Thales Corporate Events

Thales Strengthens Board with Strategic Appointments

Thales has announced two new appointments to its Board of Directors, welcoming Valérie Guillemet as a board member and Eric Trappier to the Strategy & CSR Committee. The changes follow recommendations from Dassault Aviation and include additional roles for Anne-Marie Hunot-Schmit and Stéphane Jubault in various committees. These appointments are expected to influence Thales’ strategic direction and corporate governance, which may impact stakeholders and the company’s positioning in the industry.